Lenders are going to market with a $3.46 billion commercial mortgage-backed securities offering backed by Blackstone-owned data centers, breaking the previous record established by the same portfolio four years ago.
The 10 data centers owned by Blackstone company QTS Realty Trust secured the refinancing to pay off the 2021 CMBS loan, according to presale reports. Citi Real Estate Funding is leading the loan origination, along with 10 additional lenders. The deal is expected to close in mid-December.
Blackstone declined to comment to CoStar News on the deal.
U.S. data center valuations are accelerating as artificial intelligence workloads demand massive computing infrastructure, though not all of QTS' refinanced properties were shown to have risen in value. The CMBS refinancing overall, though, demonstrates lenders' confidence in growth as AI adoption expands across industries.
More recently, investors have shown caution about AI, particularly with companies that trade at a high multiple of their current earnings.
Shares of the nearly 70 U.S.-listed stocks in the Global X Artificial Intelligence & Technology ETF have shed a collective $1.8 trillion in value since Oct. 29, according to an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge. More than 70% of AI stocks are down in that time frame. And stocks that are down are off an average of 11.6% — putting them squarely in correction territory.
Still, a low capitalization rate assigned to the latest QTS portfolio valuation signals that lenders prize data centers' stable cash flow. Morningstar DBRS, a bond rating firm that analyzed both big QTS deals, said the cap rate decreased from 7.50% to 7.32% over the four-year period, reflecting stronger market fundamentals and investor demand. The property type now trades more like core real estate rather than specialty property, according to Morningstar.
The portfolio showed an overall 18% jump in property value, rising from $4.75 billion in 2021 to $5.62 billion, Morningstar reported.
Rising, falling property values
Three assets in the portfolio posted triple- or near-triple-digit appreciation, the Morningstar DBRS presale report said. A Princeton, New Jersey, data center surged 218% to $515 million. One in Fort Worth, Texas, jumped 182% to $481 million, and one in Ashburn, Virginia, climbed 63% to $779 million.
Not all markets were equal. High-demand AI hubs in Northern New Jersey, Dallas-Fort Worth and Northern Virginia rose, while saturated markets such as Atlanta and high-cost California markets declined in value.
An Atlanta property dropped 9.5% to $1.82 billion. One in Suwanee, Georgia, fell 14.6% to $772 million, and another in Santa Clara, California, decreased 12.9% to $135 million.
Net cash flow increased 23% to $331.2 million from $270 million in 2021, according to DBRS Morningstar. The portfolio now generates $465.9 million in annual revenue.
Despite the increased cash flow, the loan value only increased 8%, improving the lenders' debt coverage — suggesting lender discipline even amid enthusiasm for the sector.
Gigawatts come online
North America added 1.6 gigawatts of data center capacity in the first half of 2025, according to real estate firm JLL. Total inventory reached 15.5 gigawatts, an enormous amount of power — enough to supply electricity to a very large metropolitan area or a small country.
The refinanced QTS properties include 214.9 megawatts of built capacity across Georgia, Texas, Virginia, California, New Jersey and Florida, DBRS Morningstar said. Leased capacity reached 202.4 megawatts and a 94% occupancy rate.
Atlanta leads the portfolio at 70.8 megawatts. Irving, Texas, follows at 33.5 megawatts. Ashburn holds 33 megawatts.
Investment-grade tenants pay 53.5% of rent, according to Morningstar DBRS. The portfolio serves more than 690 customers.